Lord Livsey of Talgarth: I have not been able to attend the proceedings on this Bill as much as I should have liked. I have been engaged in the considerations on the Water Bill, and on other legislation. Amendments Nos. 155 and 156 refer specifically to Wales. I seek some clarification from the Minister on the following points. The effect of Amendments Nos. 155 and 156 is to provide a television programme service instead of a broadcasting service. How does the Minister define that? It seems to me that this is about broadening the range of television programmes.

I should point out to the Minister that there is a difference between programmes and broadcasting. Can he say whether there is any restriction on the Welsh channel, S4C, within the amendment that would prevent it from broadcasting on different channelsfor example, digitalas compared to normal channels? Amendment No. 155 is about the provision of additional public services, for which S4C in Wales has some responsibility.

Amendment No. 156 would, again, insert the word "programme" instead of the word "broadcasting". It refers to availability for reception by members of the public in Wales. To me, that means the provision of additional public services. That is particularly difficult in Wales. We do not have uniform reception by the public in remote areas, and we must rely largely on satellite television, often supplied from a single source. Broadcasting ought to be a more comprehensive matter than the simple one of a programme serviceterrestrial versus digital, perhaps. Regional

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programmes could be slotted in, with a national Welsh programme, as far as S4C is concerned. I ask for clarification on those points.

Lord Evans of Temple Guiting: My understanding is that the amendments will give greater flexibility to C4C, so that, rather than defining things to make life difficult for it, we are defining things in such a way as to enable it to do whatever it wishes to do in the programme and broadcasting range. That is my view, but I would like to talk to officials and write at length to the noble Lord, Lord Livsey of Talgarth, explaining the detail of what I said.

Lord Livsey of Talgarth: I thank the Minister for that.

On Question, amendment agreed to.

Clause 199, as amended, agreed to.

Clauses 200 and 201 agreed to.

Clause 202 [Powers to provide other services]:

Lord Evans of Temple Guiting moved Amendments Nos. 155 and 156:

Page 179, line 24, leave out "broadcasting" and insert "programme"

Page 179, line 26, leave out "broadcasting" and insert "programme"

On Question, amendments agreed to.

Clause 202, as amended, agreed to.

Clause 203 agreed to.

1.45 p.m.

Clause 204 [Welsh Authority finances]:

Lord Prys-Davies moved Amendment No. 156A:

Page 181, line 26, after "Authority)," insert

"(a) for "may" there shall be substituted "shall"; and
(b) "

The noble Lord said: I shall take a few minutes of the Committee's time to move the amendment, which addresses the issue of the funding of the Welsh fourth channel, S4C. The setting up of S4C in 1982, after a long, difficult and controversial debate was an important landmark. It was a crucial political achievement. S4C has also been a fine broadcasting achievement, and we want it to continue to be a success.

I believe that the great majority of the people of WalesWelsh-speaking or notand Welsh people beyond Wales wish for a flourishing Welsh language television channel. I am satisfied that I can claim that the existence, strength and vitality of S4C are of overwhelming importance to the survival of the Welsh language, which is the living language closest to the old British tongue. A television service can be only as good as its structures, the creative talents available to it and its income. The three are necessary. The amendment is concerned with funding.

Basically, S4C relies for its income on statutory funding from DCMS. The funding formula is in Section 61 of the Broadcasting Act 1990, as inserted by Section 80 of the Broadcasting Act 1996. The formula

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takes the grant-aid payment to S4C in 1997 as the starting point, to be updated annually thereafter in line with RPI. Under the present formula, the Secretary of State is empowered to increase the annual uplift over and above the RPI, if she is satisfied that it is appropriate to do so, having regard to the cost of running the S4C service. That power has never been exercised. There has been an annual problem since 1998, and it has been the cause of considerable concern for the S4C authority.

The S4C authority had grave anxieties about the formula when it was brought in by the 1996 Act. The authority was then faced with a need to develop a digital service, and the cost of providing that service was not fully provided for in the formula. During the passage of the 1996 Bill through your Lordships' House, the then Minister said:

"I cannot see why S4C should be given any extra funding to meet these other costs which other broadcasters, including the BBC, will need to meet from their existing sources of revenue".[Official Report, 7/3/96; col. 438.]

It is my understanding that, in practice, the BBC was not so constrained. I understand that the BBC and every other public broadcaster received extra funding, through various mechanisms or reliefs, to meet the considerable additional cost of providing a digital service. Yet, as I said, the S4C increase has always been capped at RPI. The RPI has fallen far short of the increased staffing costs associated with digital transmission. S4C has done its best to generate revenue from commercial activities, but, as the Welsh audience is small, its efforts are inevitably constrained.

I wish to emphasise briefly three other considerations. The firstwe have heard a great deal about itis that the debate is taking place in the environment of a fiercely competitive market with a huge range of English language programmes. There is no question that the viewers of Welsh language programmes expect just as much, if not more, from their single Welsh language channel as they do from the many tens of English language programmes available to them.

In the last annual report, Professor Elan Close Stephens, the chair of the S4C Authority warned that,

"The effect of tying S4C's funding to the retail price index has been to gradually erode our ability to compete in an increasingly competitive broadcasting environment".

It is a glimpse of the obvious to state that a second-class product simply cannot compete successfully against a first-class product.

The second consideration is that S4C has demonstrated that it can be trusted to handle its budget well. I understand that its administrative costs have been less than 10 per cent of its total expenditure. That compares favourably with that of the main public service broadcasters. It has also insisted on implementing efficiency gains on the part of its independent producers. I understand that S4C programmes cost, on average, one-third of BBC programmes.

Over and above those two broadcasting considerations, there is a third to be borne in mind. S4C spends more than 95 per cent of its programme

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budget in Wales. It has been estimated by an independent body that S4C is responsible for some 2,000 jobs in Wales, many of them in Welsh-speaking areas where employment opportunities are limited. The Government would be wise to take note of this consideration.

S4C and I welcome Clause 204. It is an improvement on Section 61 as it requires the Secretary of State to take into account the costs of providing S4C services and S4C digital services. I believeno doubt, my noble friend the Minister can confirmthat Clause 204 implements Recommendation 130 of the report of the Joint Committee. S4C appreciates the response of the Joint Committee to its difficulties and appreciates its understanding of the problem.

However, the clause, as drafted, does not place a duty on the Secretary of State to uplift the grant aid over and above the RPI even when she considers it appropriate. Therefore, the position is that the Secretary of State exercises two discretions. She determines whether it is appropriate to increase the award over and above the RPIthat is her discretion. Secondly, at her complete discretion, she decides whether to exercise that power. Our amendment would remove the second discretion.

Finally, it should not be forgotten that the Bill offers no guidance as to the criteria which would influence the exercise of the power to uplift over and above the RPI. Neither is there an independent review mechanism to which S4C can appeal against the Secretary of State's decision not to uplift the award when satisfied that it would be appropriate to do so. Therefore, it appears that without an amendment along the lines of Amendment No. 156A, or in the absence of appropriate assurances by my noble friend on the Front Bench, S4C will remain unprotected against under-funding. I beg to move.

Lord Livsey of Talgarth: I strongly support this amendment. The critical situation with the Welsh language is that we have a television channel which is helping, in very large part with S4C, to sustain that language. I come from a family where all my grandparents were Welsh speaking, my parents were not, and we have ensured that the next generation is. There are many families like that in Wales.

The noble Lord, Lord Prys-Davies, has very ably moved this amendment. I do not wish to repeat what he said, except to say that he has made an extremely strong case, particularly on the crucial issue of funding and the 1997 formula. I would point out to Members of the Committee that broadcasting is not a devolved function to the National Assembly for Wales. Many of us have views about that, but none the less that is a fact. That is why we are discussing this amendment.

The fact that the amendment proposes that we shall have a duty to ensure that S4C is properly funded over and above the RPI is absolutely crucial. I should like to draw attention to the fact that in survey work there are 450,000 Welsh speakers in England alone and 500,000 in Wales. Therefore, we are discussing an

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important issue. Indeed, if this amendment is agreed, it will ensure that it will continue to thrive in a modern media environment. I am very happy to support this amendment.

2 p.m.

Lord Temple-Morris: It is a pleasure for me to follow the noble Lord, Lord Livsey, for the second time within about 10 days. I, too, support the amendment proposed by my noble friend Lord Prys-Davies. I am very grateful, as are other noble Lords, for him putting this down because it gives us the opportunity to have a short but very relevant debate in Welsh terms. Indeed, it is for that reason I added my name to support my noble friend Lord Prys-Davies who moved this amendment in a very able and dignified way.

Some Members of the Committee may be looking at me and wondering what Lord Temple-Morris is doing speaking to essentially a Welsh amendment. Those noble Lords who have known me for some years will know that I have a considerable Welsh background. Some do not realise this because I spent so many years in another place27 years to be exactas a Member of Parliament for an English constituency.

I come from a Cardiff family. I have a long background in that city and that county. I am very proud of that background. Indeed, it is fair to say that my father always taught me to be proud of the Welsh side of my ancestry. I was never left in any doubt whatever about who I should support on the rugby field. I have carried that out throughout my life. I only wish now that they played as well as they did in the days of my youth. Anyone else of Welsh ancestry here will know how heartfelt is that plea.

I want to say a few words, coming from where I amnot, incidentally, as a Welsh speaker. I say that quite deliberately: I am not a Welsh speaker and I was, indeed, educated in England. That is where I am coming from with the Welsh background. I think that it helps my noble friend Lord Prys-Davies that not being a Welsh speaker I shall speak about the Welsh language and my Welshness in the way that I am. I think that it strengthens the case. I am talking now about the atmosphere when I grew up in Cardiff in the 1950s and there has been a remarkable change. People tended then to stress their Englishness rather than their Welsh side. Some stressed it, I think, far too much and far too obviously in a false way. There was not even a Welsh Office, let alone a National Assembly.

Not much Welsh, hardly any, was heard by me and others in the Cardiff of that time. I was a young barrister in court on a number of occasions, and even in the Court of Appeal, when the Welsh Language Society and its members faced prosecution for refusing official requests written in the English language on officially communicated documents. Now it is the norm in Wales for everything to be produced in bilingual form. That marks part of the progress which has been made.

The problem was compounded by the fact that Welsh was not always taught well in schools. Sometimes its very presence was criticised. I well

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remember the then Lord Lieutenant of Monmouthshire saying some very cryptic things about it in the late 1950s.

I shall end this section of what I have to say by looking back to the 19th century. It explains not only where one is coming from today, in 2003, but also the incredible extent of the progress which has been made. Back in 1847, regional reports called the Blue Books were made for the government. I shall quote what was said in one of those reports about the Welsh language. It highlights the neo-colonial nature of the time:

"The Welsh language is a vast drawback to Wales and a manifold barrier to the moral progress and commercial prosperity of the people. Because of their language, the mass of the Welsh people are inferior to the English in every branch of practical knowledge and skill".

Noble Lords will appreciate its significance when I say: how times have changed. Today, Cardiff is a prosperous capital city. Not only is it an administrative centre both for itself and the county, but also in a national sense. Welsh institutions have been created and expanded: the National Assembly, the Welsh Office, BBC Wales, the Welsh Development Agencywhich has done outstanding work over the yearsthe National Library of Wales, a flourishing university and, at the heart of it, Channel S4C. The television channel is at the heart of this because of the Welsh language.

I shall comment briefly on the importance of the Welsh language because it is absolutely central to the national culture as well as being absolutely central to the national confidence, which was not always high in the 1950s. Now it is socially acceptable to choose to speak Welsh. I welcome the remarks of the noble Lord, Lord Livsey of Talgarth, about his family being educated in Welsh in this context. The language is now spoken with confidence, which in itself promotes confidence. At the centre of this aspect, as well as generally, is Channel S4C, which has been central in bringing the Welsh language into the mainstream.

The contrast today is very considerable. Welsh is heard frequently in Cardiff. Young people are bilingual. I mention that because it is particularly significant when making a case for S4C. People often choose to speak Welsh. Outstanding Welsh-medium schools have developed which can match anywhere else across the entire United Kingdom. Furthermore, people choose to watch Welsh language programmes.

That brings me to the vital role played by S4C and the need to preserve it. The channel is in the business not only of providing Welsh television programmes, but of providing quality programmes. It must maintain that level of quality or its bilingual audience will switch over to English language programmes. That is an important point. Everyone who chooses to watch S4C does so in the overwhelming majority in order to watch that channel. Perhaps the viewers enjoy the Welsh language and want to participate in it. At the same time, however, if the programmes are not of the necessary quality, viewers are able to choose anything else from an increasingly vast menu. S4C has to be fairly and adequately funded.

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I do not wish to repeat the points made by my noble friend Lord Prys-Davies, but they should be considered in the light of the expense of the shift to digital and the fact of much greater competition from the increased number of channels, along with the central and all-important social and cultural roles played by S4C in the Welsh nation. The financial case was very well put by my noble friend Lord Prys-Davies and I do not intend to repeat it. He mentioned the large number of jobs generated and money spent in Wales entailed by running the channel.

I shall be brief because I do not want to repeat anything that has been said. However, I want to reinforce one aspect of the remarks made by my noble friend in proposing the amendment. To that end, I shall quote from the departmental Explanatory Notes on the Bill. The notes explain what is at the centre of the amendment, which seeks to delete the word "may" and insert the word "shall":

"Subsection (7) amends section 61 of the Broadcasting Act 1990 so that the Secretary of State may increase the annual grant paid to the Welsh Authority if she is satisfied that additional funding is appropriate in light of the costs they incur in providing their public services and broadcasting or distributing such services".

In welcoming that as it standswe have already made that clearthe amendment makes the reasonable case that if the Secretary of State is satisfied that additional funding would be appropriate, it seems awfully mean if the Secretary of State does not then go ahead and give that extra funding to Channel S4C. She would have the discretion to be satisfied or not to be satisfied, but if she is satisfied, we ask that the additional amount "shall" be given, bearing in mind that the amount of additional funding is at the discretion of the Secretary of State.

S4C is uniquely important to Wales. It is essential to the development, expansion and enjoyment of the Welsh language, which itself is at the centre of the remarkable changes that have taken place over recent years. It respects the pride and culture of the country and as such it should be preserved and encouraged.